TaxTMI 
TaxTMI 
Comprehensive Framework on Offer for Sale (OFS) of Shares through Stock Exchange Mechanism
X X X X Extracts X X X X
X X X X Extracts X X X X
....id Shares" are listed securities forming part of Group I securities as per SEBI circular No.MRD/DoP/SE/Cir-07/2005 dated February 23, 2005 and having mean impact cost of greater than 0.05 percent and less than or equal to 0.10 percent for a trade of Rupees One Lakh. 1.5 "Most Liquid Shares" are listed securities forming part of Group I securities as per SEBI Circular No.MRD/DoP/SE/Cir-07/2005 dated February 23, 2005 and having mean impact cost of up to 0.05 percent for a trade of Rupees One Lakh. 1.6 "Multiple Clearing Prices" are the prices at which the shares are allocated to the successful bidders in a price priority methodology. 1.7 "Shares" are the listed equity shares of the company. 1.8 "Single Clearing Price" is the price at which the shares are allocated to the successful bidders in a proportionate basis methodology. 1.9 "Size of the Offer" is the number of shares offered * floor price. 1.10 "T day" is first day of OFS. 1.11 "Units" are the listed units of Real Estate Investment Trusts (REITs) or Infrastructure Investment Trusts (InvITs). 2.0 Eligibility 2.1 Exchanges: The facility of OFS of s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lders for offering the shares through OFS mechanism shall be based on the liquidity of the shares on exchanges and are as under: i. For most liquid shares: +2 weeks ii. For liquid shares: +4 weeks and iii. For illiquid shares: +12 weeks 2.4.2 Notwithstanding the cooling off period mentioned above, the promoter(s) or promoter group entities of companies whose shares are either liquid or illiquid can offer their shares only through OFS or Qualified Institutional Placement (QIP) with a gap of 2 weeks between successive offers. 2.4.3 In case of under subscription of OFS of a company whose shares are either liquid or illiquid and if the original OFS is made for compliance with Minimum Public Shareholding (MPS) norms, the promoter(s) or promoter group entities are allowed to offer the unsubscribed portion of the OFS only for the purpose of MPS compliance in the open market with a gap of 2 weeks from the closure of OFS, subject to compliance with all other applicable conditions. 3.0 Size of OFS of Shares The size of the offer shall be a minimum of INR 25 Cr. However, size of offer can be less than INR 25 Cr. by promoter(s) or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3.1 Seller shall disclose the floor price latest by 5 pm (or latest by 6 pm, if extension is granted by stock exchange in terms of paragraph 5.2 above) on T-1 day to the stock exchange. Stock exchanges shall ensure that the same is informed to the market immediately. 5.3.2 The promoters may at their discretion offer these shares to employees at the price discovered in the said OFS transaction or at a discount to the price discovered in the said OFS transaction. 5.3.3 Promoters shall make necessary disclosures in the OFS notice to the exchange including number of shares offered to employees and discount offered, if any. 5.4 Discount by Seller 5.4.1 Seller may offer discount to retail investors. The details of discount and percentage of reservation for retail investors shall be disclosed upfront in the notice of OFS to the exchange. 5.4.2 Discount to retail investors may be offered as follows: a) Multiple Clearing Price OFS i. Retail investors may be allocated shares at a discount to the cut-off price determined in the retail category, irrespective of the bid price entered by them. Or, ii. Retail investors may be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....upon the floor price declared by the seller. c) There shall be no indicative price for the retail portion of OFS. d) Retail investors may enter a price bid or opt for bidding at cut-off price. e) Margin for retail bids placed at cut-off price shall be at the cut-off price determined based on the bids received on T Day and for price bids at the value of the bid. f) Bidding by retail investors on T+1 Day shall be based on the cut-off price determined in the non-retail category. In case of under subscription in the non-retail category, the retail investors shall be allowed to place their bids at floor price on T+1 day. g) Seller may offer discount to retail investors on the cut off price determined based on the bids received on T+1 day. h) Retail bids below the cut-off price of T day or the floor price, whichever is applicable, shall be rejected. Retail bids at cut-off price shall be allocated on proportionate basis in case of over subscription. i) Any unsubscribed portion of non-retail category after allotment shall be eligible for allocation in the retail category and vice versa. 5.6.4 Cumulative bid quantity sh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e within trading hours. In case of institutional investors who place orders without upfront margin, custodian confirmation shall be as per the existing rules for secondary market transactions. The funds collected shall neither be utilized against any other obligation of the trading member nor co-mingled with other segments. 6.2 In respect of bids in the retail category, clearing corporation shall collect margin to the extent of 100% of order value in cash or cash equivalents. Pay-in and pay-out for retail bids shall take place as per normal secondary market transactions. 6.3 In case of order or bid modification or cancellation, such funds shall be released or collected on a real time basis by the clearing corporation. 6.4 The seller(s) shall deposit the entire quantity of shares offered for sale including the additional shares disclosed, in terms of paragraph 5.2.6 above, as pay-in with the designated clearing corporation under the framework of interoperability of clearing corporations prior to the commencement of the offer. No other margin shall be charged on the seller(s). 7.0 Allocation 7.1 Minimum of 25% of the shares offered shall b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a single clearing price). 7.8 No single bidder other than mutual funds and insurance companies shall be allocated more than 25% of the size of OFS. 7.9 The allocation details shall be shared by the DSE with the other exchanges after the allocation is finalized. 8.0 Settlement 8.1 The allocation and the obligations resulting thereof shall be intimated to the brokers or clearing members on T day. 8.2 Settlement shall take place on trade for trade basis. For non-institutional orders or bids and for institutional orders with 100% margin, settlement shall take place on T+1 day. In case of orders or bids of institutional investors with no margin, settlement shall be as per the existing rules for secondary market transactions. 8.3 Settlement for bids received on T+1 day shall be carried out as per the existing rules for secondary market transactions. 8.4 Funds collected from the bidders who have not been allocated shares shall be released after the download of the obligation. 8.5 On the day prior to settlement, to the extent of obligation determined, the designated clearing corporation of the seller broker(s) und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncellation. B. OFS Framework for sale of units of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) 1.0 OFS for sale of units of REITs and InvITs by sponsor(s) or sponsor group entities, and other unitholders shall be permitted only in publicly issued and listed REITs and InvITs. The OFS framework for REITs and InvITs shall be equivalent to the OFS framework prescribed at paragraph-A above for equity shares of listed companies. C. Applicability: 1.0 The provisions of this Circular shall come into effect from 30th day of issuance of this circular. 2.0 The existing provision on OFS issued through various SEBI circulars mentioned as under shall be rescinded with effect from the date of implementation of this circular: i. Circular No.CIR/MRD/DP/18/2012 dated July 18, 2012, ii. Circular No.CIR/MRD/DP/04/2013 dated January 25, 2013, iii. Circular No.CIR/MRD/DP/17/2013 dated May 30, 2013, iv. Circular No.CIR/MRD/DP/24/2014 dated August 08, 2014, v. Circular No.CIR/MRD/DP/32/2014 dated December 01, 2014, vi. Circular No.CIR/MRD/DP/12/2015 dated June 26, 2015, vi....